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APMC Markets - From being a Solution to a Problem

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December 08, 2020

What is the issue?

In the light of the ongoing farmer protests, here is a look at how APMC (Agriculture Produce Market Committee) markets went from being a solution to a problem.

How did the APMC act help?

  • From the 1960s, there have been concerted efforts to bring all wholesale markets for agricultural produce in various states under the Agriculture Produce Market Regulation (APMR) acts.
  • All states, except Kerala, Jammu and Kashmir and Manipur, enacted such laws.
  • The APMC Acts mandated that the sale/purchase of agricultural commodities is carried out in a specified market area.
  • Producer-sellers or traders pay the requisite market fee, user charges, levies and commissions for the commission agents (arhatias).
  • These charges were levied irrespective of whether the sale took place inside APMC premises or outside it.
  • Also, the charges varied widely across states and commodities.
  • In the initial years, APMC acts helped remove malpractices.
  • It freed the farmers from the exploitative power of middlemen and mercantile capital.
  • The golden period for APMC markets lasted till around 1991.

How did APMCs become a problem then?

  • With time, there was a considerable loss in growth in market facilities.
  • By 2006, it had declined to less than one-fourth of the growth in crop output after which there was no further growth.
  • This increased the woes of Indian farmers.
  • Market facilities did not keep pace with the increase in output.
  • But regulation did not allow farmers to sell outside APMC markets.
  • So, the farmers were left with no choice but to seek the help of middlemen.
  • Due to poor market infrastructure, more produce is sold outside markets than in APMC mandis.
  • The net result was a system of interlocked transactions that robs farmers of their choice to decide to whom and where to sell.
  • This, ultimately, subjected farmers to exploitation by middlemen.
  • Over time, APMC markets have been turned from infrastructure services to a source of revenue generation.
  • In several states, commission charges were increased without any improvement in the services.
  • And to avoid any protests from farmers against these high charges, most of these were required to be paid by buyers like the FCI (Food Corporation of India).
  • This resulted in a heavy burden on the Centre.
  • It also increased the logistics cost for domestic produce and reduced trade competitiveness.
  • Given the above drawbacks, successive governments at the Centre made attempts to persuade the states to make appropriate changes in their APMC acts.
  • But for 18 long years, the progress in reforms remained slow.

What is the latest move?

  • It is in the above backdrop that the Farmers’ Produce Trading and Commerce Act 2020 (FPTC Act) was brought in. Click here to know more on farm reform laws.
  • The FPTC Act gives farmers the freedom to sell and buy farm produce at any place in the country.
  • They can sell and buy in APMC markets or outside the mandated area, to any trader, like sale of milk.
  • The Act also allows transactions on electronic platforms to promote e-commerce in agriculture trade.

 

Source: The Indian Express

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